The bank lives in “a perfect storm” in which it has to reduce costs to continue “surviving”. It is a statement by the deputy governor of the Bank of Spain, Margarita Delgado, who insists that the profitability of the sector is a problem and that is why it is necessary to reduce costs, for which “unfortunately” the closure of offices and staff reductions are one of the few options there are. The statement comes at a time when CaixaBank and BBVA are trying to reach an agreement with the unions to cut almost 11,000 jobs in Spain.
The deputy governor has insisted that the current situation has little to do with the past And, although Spanish banks have closed half of their branches and have reduced their workforce by 40% since the bursting of the real estate bubble in 2008, now is when they have reached levels comparable to the rest of Europe. The reality is that Spain is still the second European country with the most offices per inhabitant, only surpassed by France.
From there, ensures that there is scope to further reduce costs and gain efficiency. Along the same lines, the general director of the CECA, José María Méndez, stressed that “the only way” for the financial system to be sustainable over time is for it to be profitable and that, throughout Europe, requires measures to be taken ambitious to reduce installed capacity and regain efficiency. “Only by being efficient, the sector will be able to maintain the flow of credit to the real economy,” he warned.
The deputy governor considers, during her participation in a meeting on the challenges of banking organized by Diario Sur, that the pandemic will leave “wounds” In the productive fabric and banks, they will have to be able to distinguish between companies that are viable and those that are not, in order to contribute to economic recovery. The coronavirus crisis has also accelerated the transformation of the sector and most entities are currently rethinking their business model, the deputy governor explained.
In his opinion, banks have to be prepared to compete with new players and this requires investing in technology even if it is to imitate the advances of others, and to do so especially to improve data management. In the short term, the deputy governor reiterates the need for banks to continue to constantly monitor the risks granted before and during the pandemic and use early warnings to prepare for a possible increase in defaults.
Although thin it is clear that there is scope to reduce costs, has not dared to predict whether there will be more mergers in Spain to achieve it or it will be possible to gain efficiency without corporate operations. In any case, “fortunately” Spain continues to be a highly banked country, without financial exclusion and with a very competitive financial sector, although the number of entities has been reduced in recent years.
About the cross-border mergers, the deputy governor admits that “doing traditional banking is much more difficult” for this type of operation to take place, since the usual cost synergies of national consolidation processes do not occur.
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